A 10-year, 10% coupon bond, semi-annual payments, $1,000 Par, is expected to make all coupon payments...

A 10-year, 10% coupon bond, semi-annual payments, $1,000 Par, is expected to make all coupon payments but to pay only 50% of par value at maturity. What is the expected yield on this bond if the bond is purchased for $975?

		a. 10.00%
		b. 6.77%
		c. None of the options are correct.
		d. 11.68%
		e. 6.68%

Solutions

Expert Solution

Semi-annual coupon = 1000*10%*6/12 = 50

Maturity value = 1000*50% = 500

Total payments = 10*2 = 20

Using calculator

Calculator
Inputs:
PV	(975.000)
PMT	50.00
FV	500.00
N	20

Output:
I/Y = IRR	3.385039%
Annual YTM	6.77008%

Answer is:

6.77%

Please rate.

jeff jeffy answered 1 year ago

Next > < Previous

Related Solutions

A 10-year maturity bond with par value of $1,000 makes annual coupon payments at a coupon...

A 10-year maturity bond with par value of $1,000 makes annual coupon payments at a coupon rate of 8%. Find the bond equivalent and effective annual yield to maturity of the bond for the following bond prices. (Round your answers to 2 decimal places.) Bond prices: 950, 1000, 1050 What are the Bond Equivalent Annual Yield to Maturity and Effective Annual Yield to Maturity

A $1,000 bond with annual coupon payments at 9% of par has an expected return of...

A $1,000 bond with annual coupon payments at 9% of par has an expected return of 11% over the life of the bond, compute the value of the bond at these times to maturity 12, 8, 5, 2 years ( and how do i enter this information into an online bond yield to maturity calculator)

i) You just purchased a 10-year semi-annual coupon bond with a par value of $1,000 and...

i) You just purchased a 10-year semi-annual coupon bond with a par value of $1,000 and a coupon rate of 8%. The nominal yield to maturity is 7% per annum. Calculate the market price of the bond. ii)Three years later, immediately after receiving the sixth coupon payment, you sell the bond to your best friend. Your best friend’s nominal yield to maturity is 9% per annum. Calculate the price paid by your best friend.

What is the YTM of a four-year semi-annual coupon bond with a par value of $1,000...

What is the YTM of a four-year semi-annual coupon bond with a par value of $1,000 and a 6% coupon rate when the bond is priced at $940?

A bond with a par value of $1,000 has a 6% coupon rate with semi-annual coupon...

A bond with a par value of $1,000 has a 6% coupon rate with semi-annual coupon payments made on July 1 and January 1. If the bond changes hands on November 1, which of the following is true with respect to accrued interest? The buyer will pay the seller $20 of accrued interest The seller will pay the buyer $20 of accrued interest The buyer will pay the seller $10 of accrued interest The seller will pay the buyer $10...

A 15-year, $1,000 par bond with a 6.5% semi-annual coupon currently trades at a price of...

A 15-year, $1,000 par bond with a 6.5% semi-annual coupon currently trades at a price of $1,215. If the yield to maturity of the bond remains constant, what will be its price in six years? A. $1,268.00 B. $1,145.73 C. $1,080.16 D. $846.71 E. $1,103.49

Bond A: 10-year annual bond, price $1010, coupon rate 6% par $1000 bond B: 10-year semi-annual...

Bond A: 10-year annual bond, price $1010, coupon rate 6% par $1000 bond B: 10-year semi-annual bond, price $1010, coupon rate 6%, par $1000 Does bond A has a higher cost of debt than bond B?

21. If a 3-year, semi-annual bond ($1,000 par value) has an annual coupon rate of 8...

21. If a 3-year, semi-annual bond ($1,000 par value) has an annual coupon rate of 8 percent, and an annual yield to maturity of 6 percent, then calculate Macaulay's duration of the bond using the table format demonstrated in the video (not the equation)

An 8-year $1,000 par Treasury bond pays a 7 percent semi-annual coupon. The bond has a...

An 8-year $1,000 par Treasury bond pays a 7 percent semi-annual coupon. The bond has a conversion factor of 1.025. The risk-free is 6 percent and the annual yield on the bond is 7 percent. The bond just made a coupon payment. The price of a 15-month futures contract is closest to: A. $1 049.32 B. $979.00 C. $983.32

Complete the following table (use $1000 Par value, 10 years, & semi-annual coupon payments): Bond Coupon...

Complete the following table (use $1000 Par value, 10 years, & semi-annual coupon payments): Bond Coupon Rate Yield to Maturity Coupon Payment Bond Value Discount or Premium A 5.0% 4.5% B 6.0% 9.0% C 4.0% 8.0% D 9.0% 8.0% E 12.0% 15.0%

Subjects